INSURANCE LANDMINES SERIES

The single most important thing I can communicate to any lawyer-or to any lawyer's client--is Rule Number One: The Insurance Company is NOT Your FRIEND.

Some will say, “Everybody knows that.” But I have witnessed the anguish of countless individuals--business owners, executives, professionals, and high net worth individuals--who thought their insurer was their friend, only to discover when the chips were down that their insurer was actually and exclusively a tough, sophisticated, for-profit business.

How does that happen? How is it that highly intelligent, well educated, and otherwise savvy people end up without insurance coverage, asking in acute frustration, “Why do I even buy insurance?”

The answer usually is that they trusted their insurer to be a friend when they needed help. They bought into the insurer's happy talk and cleverly worded promises, they trusted their insurance agent or broker to get the “right” coverage for them and in the end bought a pig in a poke. They did not shop for the right coverage, they did not compare or seek improvements to the candidate policies before they bought the coverage, and when the policies arrived in the mail weeks or months later, they put them into a drawer--without reading them--hoping they would never have to rely on them.

I’m not judging. Virtually everyone does the same thing. I've certainly done it.

But the universal reality that should inform every policyholder's decision from the moment they first consider buying insurance to the very end of the very last claim, is Rule Number One: The Insurance Company is not your friend. No matter what the insurer's advertising says, no matter what the agent or broker says, the insurance company will not be your benevolent protector. It will not be the friend who will sacrifice its own interests in its policyholder's time of need. No, it will be a focused, disciplined, and entirely one-sided for-profit business that will always operate to its own perceived advantage. When it sells a policy, it will do so for the sole purpose of making money. If it pays a claim, it will do so because it believes—and only to the extent it believes—the payment will inure to its own benefit. It will never pay a claim out of charity, kindness, or compassion toward you the policyholder. Never. Anyone who says differently is selling something.

So always, always remember, no matter what the risk may be, no matter how complicated or fraught with doubt the decision before you may be, see Rule Number One: The Insurance Company is Not Your Friend.